Dutch NAM ordered to pay EUR 377 million to end dispute
Nederlandse Aardolie Maatschappij (NAM), the Dutch gas and oil producer jointly owned by Shell and ExxonMobil, has been ordered by state arbitrators to pay about EUR 377 million to the Dutch state to settle a dispute arising from differing interpretations of a Groningen gas revenue allocation agreement, economic affairs minister Laurens-Jan Brinkhorst said this week in a letter to the second chamber of parliament.
The decision presages the end of a protracted dispute originating in a concessions overlap in the Dutch-German border region that dates back to the 1990s. A part of the Groningen gas field, which accounts for more than half (about 27 billion m³) of NAM´s total annual production (of about 50 Gm³), lies in the Eems-Dollard region, where the Dutch-German border path is subject to controversy.
An inter-governmental agreement established that the gas reserves in the disputed area – which became known as the “Common Area” – should be shared equally. On the Dutch side, the concession was awarded to operator NAM and on the German side to Brigitta Erdgas und Erdöl GmbH.
A dispute between Brigitta and NAM erupted in the early 1990s when it emerged that Brigitta had taken up more gas than it was entitled to, amounting to over 20 Gm³. The German producer was ordered to compensate NAM with a payment worth EUR 2.35 billion. The issue led to an argument involving the Dutch state authorities because NAM, which paid the customary basis contribution (EUR 1.60 billion) to the state, did not consider itself liable to pay a contribution for this pursuant to the Agreement on Allocation of Additional Revenues for Groningen Gas (MOR).
Recently, the state arbitrators decided that the remaining revenues, which NAM had so far retained, have to be divided equally between the parties due to the additional effects of “reasonableness and fairness” even though the MOR agreement was not directly applicable. However, there may still be more wrangling in store because NAM holds the view that the amount should be settled in compliance with the “basic contributions scheme,” meaning that the amount due (EUR 377 million) “should be paid to the state as a net amount of some EUR 120 million”. “The parties are currently conducting further talks on this issue,” the Dutch economics minister said.
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